Prosperity Watch Issue 35, No.1: Hard work fails to pay off for North Carolina's workers

At the heart of the American Dream is the idea that hard work is supposed to pay off—that anyone who works a full time job should be able to make ends and achieve upward mobility over the course of their lives. Unfortunately, seismic shifts in the global economy away from manufacturing and towards services have pushed this dream further and further away from too many of North Carolina’s workers.

In the process of this transformation, North Carolina has lost thousands of middle class jobs and seen them replaced with jobs that either pay a lot less and require little education, or pay a lot more but require significant investment in education and training. In fact, since 2000, high-wage manufacturing employment in North Carolina has fallen by almost half, a larger drop than the national average and that of any surrounding state. Eight of the top 10 industries with the biggest job losses over this period were in manufacturing.

At the same time, the service sector boomed, growing by 15 percent and generating an explosion of poverty-wage jobs, which often require little education and pay less than $23,484 per year. The total number of these poverty-wage jobs grew by 19 percent since 2000, the fastest category of jobs in the entire economy. At the same time, high-wage jobs—those paying more than $43,950 and requiring significant education—grew by 3 percent.

As a result, the ability of a worker to gain education and develop skills is increasingly the most important factor in determining long-term earning capacity over the course a career. All too often, poverty-wage service jobs provide little opportunity to increase skills and earn progressively higher wages over time. At the same time, high education requirements can raise significant barriers to less-skilled workers who wish to enter higher-wage industries. And the high cost of post-secondary education and reduced funding for training programs have made these barriers even more difficult to cross.

In turn, too many workers face the harsh reality of becoming locked-in to low-wage work, with little opportunity for anything else, absent additional and affordable opportunities to improve their skills. To address this problem, policy makers should invest in career pathway programs designed to provide workers with progressively higher skill levels and allow them to earn progressively higher wages over the course of their careers. This is a critical remedy to North Carolina’s low-wage future.